Morning Report – Retail Sales Fall 3/12/15

Stocks are higher this morning after the big US banks passed their stress tests and raised dividends / buybacks. Bonds and MBS are up.

Retail Sales fell .6% in February. Ex autos and gas, they fell .2%. Poor weather on the East Coast and the West Coast port strike undoubtedly affected these numbers. The port strike is causing retailers to be light on spring inventory, particularly apparel.

Initial Jobless Claims fell to 289k from 320k the week. Import Prices rose .4% in Feb, but are down 9.4% year-over-year. The Bloomberg Consumer Comfort Index rose to 43.3, and business inventories were flat in January.

Are we starting to feel the economic effects of the stronger dollar? Exporters are beginning to cite dollar strength for weakness in their overseas operations.

34 Responses

  1. Frist again–take that, @kevinwillis1!!

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    • Brent, what is the inside view of the reopening of ALL the Sandy claims?

      The massive fraud that is being alleged actually seems as if it could not be true – adjusters are not friends of the insured, to be frank, but wouldn’t this sort of conspiracy have to include hundreds? Or did one firm get all the adjusting work?

      My son left a cushy job for a year to contract as an adjuster after Katrina and my understanding from that is that big disasters take lots of contracting adjusters. Hence my skepticism.

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  2. Mark, it is a story i have not been following at all.

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  3. That’s interesting Mark. Any links?

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  4. Brent, you’ll appreciate this from an interview of a Marxist Syriza member of the Greek Parliament on Jacobin no less:

    “Unfortunately, much of the Marxist left has pretended that this is not the case or misunderstood the importance of money here. And that’s not surprising, because the European left simply doesn’t understand money and finance. It pretends that it does, but it doesn’t.”

    https://www.jacobinmag.com/2015/03/lapavitsas-varoufakis-grexit-syriza/

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  5. @Michigoose: “Frist again–take that”

    I let you win.

    😉

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  6. Thanks Mark. I had thought it was the other way around not that the insurers and FEMA were the ones doing the defrauding.

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    • jnc:

      I had thought it was the other way around not that the insurers and FEMA were the ones doing the defrauding.

      The other way around starts happening now. I was told one story last week (second hand from a colleague who had flood damage) about an assessor who had already been sent out to re-evaluate reports that were suspected to be low-balled. Despite the fact that the work had already been done and paid for, the new assessment has the guy getting paid more than the work actually cost.

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  7. Looks like the administration is getting creative on end-running Congress and the next administration on Iran.

    “But a Security Council resolution on a nuclear deal with Iran could be legally binding, say Western diplomatic officials, complicating and possibly undercutting future attempts by Republicans in Washington to unravel an agreement.”

    http://www.reuters.com/article/2015/03/12/us-iran-nuclear-idUSKBN0M82IS20150312

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    • “Western diplomats”? Could be anyone. Not sure I place much stock in what some French UN ambassador thinks is “legally binding” under US law.

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  8. They aren’t wrong:

    “How a U.N. Security Council Resolution Transforms a Non-Binding Agreement with Iran Into a Binding Obligation Under International Law (Without Any New Senatorial or Congressional Vote)

    By Jack Goldsmith
    Thursday, March 12, 2015 at 8:37 AM”

    http://www.lawfareblog.com/2015/03/how-a-u-n-security-council-resolution-transforms-a-non-binding-agreement-with-iran-into-a-binding-obligation-under-international-law-without-any-new-senatorial-or-congressional-vote/

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    • jnc (from the article):

      I have outlined a way that the President could transform the non-binding obligations of the deal with Iran into binding obligations under international law without new Senate or congressional participation. I say “new” because, of course, the Senate gave its consent to the U.N. Charter seventy years ago.

      This points to a problem I have long had with the notion of “international law” and the authority of the UN. The constitution, not so-called international law, governs what the U.S. government can and cannot legally do. And no where in the constitution does it say that a given congress is allowed to delegate or subjugate it’s own constitutional authority, not to mention that of future congresses 72 years hence, to any other outside institutions, much less foreign ones. Indeed, the notion that it could is contrary to the very point of the constitution and the principles that animate it.

      So I totally reject the notion that the UN could ever do anything that would “legally bind” the US to do, or from doing, anything at all. I think the notion that the clear requirements of the constitution regarding treaty ratification could somehow be legally evaded due simply to the actions of 4 foreign governments to be utterly absurd. Besides which, just who is going to enforce this “international law” against a future president and congress that decides that the agreement is not at all binding and imposes sanctions on Iran? And how exactly will they enforce it?

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      • Let us separate the real from the unreal.

        REAL
        1] Scott is correct that no international obligation, no matter how lawful and “binding”, is worth the paper it is written on if the parties do not choose to honor it.

        2] No sanction regime against Iran works without European and Japanese and Australian cooperation. Bibi and Boehner cannot enforce a sanction regime.
        UNREAL
        Bibi’s position that negotiating tough inspections in exchange for sanction relief is bad because it only delays Iran’s nukes “ten years” is ridiculous, because without tough inspections Iran will get nukes sooner. And just because the US breaks off negotiations does not mean anyone else will. Europe wants Iranian oil and trade with Iran.

        Effectively, Bibi is counseling the USA to go to war to protect Israel’s interest, which Israel’s own Mossad says is not threatened by Iran! Thus we are talking about bibi’s political interest, not Israeli security, and certainly not ours.

        And as I think George is suggesting, there are some suckers buying that we should fight Bibi’s war, including my man John McCain.

        Bright spot is that Bibi probably has lost the election in Israel with his stunt.

        Another unreality in this story is that Rs are doing something entirely without precedent – I am old enough to recall Speaker Wright [D] opening negotiations of his own with Nicaragua.

        Stupid then, and stupid now.

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        • Mark:

          …Israel’s interest, which Israel’s own Mossad says is not threatened by Iran!

          When/where has it said this? That would be pretty remarkable, I think.

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        • Scott –

          http://tinyurl.com/l5z4a66

          http://www.haaretz.com/news/diplomacy-defense/1.643783

          In fairness:

          NR criticism of the Mossad view based on its own sources:

          http://tinyurl.com/n6ecly9

          But you can find many references to Israeli security forces assessing the risk at a far lower level than does Bibi.

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        • I should add that in Israel not only Mossad but Shin Bet and the IDF chiefs question Bibi’s allegations of fact, his motives, and his rationality. They grumble about his “messianism”. This has been ongoing as long as Bibi has been in a position of authority.

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        • Mark:

          I should add that in Israel not only Mossad but Shin Bet and the IDF chiefs question Bibi’s allegations of fact, his motives, and his rationality.

          Plenty of people in various areas of the US government pose the same questions about Obama, no?

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        • NO COMPARISON TO THIS:
          Commanders for Israel’s Security hold press conference.‏. (photo credit:AVSHALOM SASSONI)

          Prime Minister Benjamin Netanyahu is responsible for failed policies on Hamas and the Iranian nuclear program, and he has poisoned Israel’s relationship with the United States, former Mossad chief Shabtai Shavit said on Wednesday.

          “No one else is responsible for the failures in facing Hamas, the Iranian nuclear program.

          No one else is responsible for turning the United States from an ally into an enemy,” Shavit said. “We are asking you, where is your sense of responsibility?” Shavit, who served as director of the Mossad from 1989 to 1996, also said Netanyahu was bad for the nation’s security and that in his opinion, the prime minister’s handling of the Iranian nuclear issue so far had been “one big mistake which has caused damage to the State of Israel and, I am certain, will cause damage in the future as well.”

          He made the comments at a press conference held by Commanders for the Security of Israel – a group that describes itself as a non-partisan movement of former top security officials from the IDF, Mossad, Shin Bet (Israel Security Agency), and police who are devoted to promoting a regional initiative to bring peace between Israel and the Palestinians, and to normalize Israel’s relations with the Arab world.

          The group includes around 200 former top security officials.

          At the beginning of the month, it called on Netanyahu to cancel his March 3 speech to the US Congress, and warned that his security and diplomacy policies were destroying Israel’s alliance with the US, harming the Jewish state’s deterrence and helping Iran get closer to obtaining nuclear weapons.

          In addition to Shavit, the press conference featured Brig.-Gen. (res.) Asher Levy, Maj.-Gen. (res.) Amnon Reshef, Brig.-Gen. (res.) Giora Inbar and Aryeh Felman, former division head and deputy director of the Shin Bet.

          Reshef claimed that Netanyahu “suffers from the sort of diplomatic blindness that we saw before the Yom Kippur War.”

          He added that “unfortunately we paid a heavy price in the Yom Kippur War, a price that could have been prevented if we would have understood what [the Egyptians] wanted.

          In the end, we ceded every millimeter of land, but lost valuable people. Unlike what the prime minister and his people say, the Israeli public believes in a diplomatic solution with the moderate pragmatic Arab states, into which the Palestinian issue can be integrated. The IDF can defend Israel on any borders that are established by the government.”

          The press conference took place just days after former Mossad chief Meir Dagan, who served from 2002-2011, slammed the prime minister at a major anti-Netanyahu rally in Tel Aviv. Dagan said at the Saturday night rally that while Israel was surrounded by enemies, he was more frightened by Israel’s leadership, which he said had a “lack of vision and loss of direction.”

          “I am frightened by the hesitation and the stagnation,” he said. “And I am frightened, above all else, by a crisis in leadership. It is the worst crisis that Israel has seen to this day.”

          A day earlier, Channel 2 aired an interview with Dagan in which he referred to claims Netanyahu had made in his Congress speech as “bullshit.”

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        • Mark:

          NO COMPARISON TO THIS:

          I don’t know anything about the Commanders for the Security of Israel organization, so I’m not at all sure how to judge it or its claims. I googled it and nearly every link it returned was about the particular criticism of Netanyahu that you highlight, so it is difficult to get a sense of what it is really all about or how much authority to give its pronouncements. One link mentioned that it was one of many issue oriented groups that had recently been formed to influence the upcoming elections, and it doesn’t seem to have much of a history.

          Perhaps you have more info on it?

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        • Mark:

          But you can find many references to Israeli security forces assessing the risk at a far lower level than does Bibi.

          There is quite a difference between a claim that Iran poses less of an immediate risk to Israel than Netanyahu says and that Israel’s interests are not threatened by Iran. I would be shocked if anyone in Mossad claimed the latter.

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  9. What’s the most anybody here is willing to commit to prevent Iran from acquiring nuke?

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  10. As a side note, I think the only way Israel can deal with Iran’s nuclear capability will be with nukes. The U.S. would have a helluva time ourselves just knocking out their air defense systems before bombing. The Israeli’s just don’t have the airforce infrastructure.

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  11. “because without tough inspections Iran will get nukes sooner. ”

    I doubt that the agreement as currently constituted will retard Iran’s development at all and the sanctions relief will speed it up.

    I see this as a repeat of North Korea.

    The real question for Netanyahu and the Republicans is whether or not the current sanctions regime is sustainable if the deal collapses, especially if the collapse is caused by the United States and Israel.

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    • JNC – you KNOW the state of the negotiations? You know the limits of the inspection system as proposed by the western powers?

      Bibi, who has consistently said Iran will have nuke capability within a very short timeline since the 90s is the boy who cried “Wolf!” too many times, and even he now says the negotiations, as he understands them, only buy ten years.

      The OTHER real question for Netanyahu and the Republicans is whether or not the current sanctions regime is sustainable if the deal collapses, especially if the collapse is caused by the United States and Israel. [FIXED]

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  12. Do you think Bibi is emotionally unstable?

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    • Do you think Bibi is emotionally unstable?

      I never even took a psychology course. I would x-examine him under the assumption that he was rational and well capable of representing his own personal interests, tough and stable. But I would confront him with facts, with his own statements over many years, and with his constant predictive failures. I would seek to undermine his credibility, not play him to the jury as unstable.

      Scott: Israel’s interests are not threatened by Iran was an overstatement out of context – through Hizbollah Iran does mess with Israel. I should have said that in the context of obtaining a nuke Iran poses no current or near term threat. I thought the context made up for the lack of precision. Sorry.

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  13. Could a rational argument be made that a nuclear armed Iran poses an immediate existential threat to the country of Israel?

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    • McWing;

      Could a rational argument be made that a nuclear armed Iran poses an immediate existential threat to the country of Israel?

      I have more doubts that a rational argument can be made that a nuclear armed Iran doesn’t pose an immediate existential threat to Israel than that one can be made that it does pose such a threat.

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  14. “JNC – you KNOW the state of the negotiations? You know the limits of the inspection system as proposed by the western powers?”

    What I’ve read is that they will be allowed to continue enrichment themselves and that’s a major shift from the original Western position that all fuel had to be supplied by and disposed by the consortium.

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    • allowed to continue enrichment themselves

      falls into the category of “big deal, so what?” As the Mossad assessment pointed out they have been enriching to 20% for years. They have actually shown no signs of doing anything but enriching to run their power stations.

      Could a rational argument be made that a nuclear armed Iran poses an immediate existential threat to the country of Israel?

      Sure.

      The relevant question is “what avenue is more likely to stifle a nuclear armed Iran, putting inspectors in place, or not?”

      The actual Iranian pressure for a deal is from the privately owned business class that wants to trade with the west. The actual Iranian pressure against the deal is from the Iranian Republican Guard, which runs a competing shadow economy that profits from the black market created by the sanctions, and which pays no taxes.

      Iran’s current President has railed against “monopolies” that “pay no taxes” which is as close as he can get to singling the bastards out.

      I am as concerned by Scott’s dictum about agreements that the next President of Iran won’t keep it as I am that President Lindsay Graham won’t. But if Iran violates the deal, we are just back to where we are now, with the choice of sanctions or war. We will have bought lessened tensions for a period at no cost to our own security or anyone else’s for that matter.

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      • Mark:

        As the Mossad assessment pointed out they have been enriching to 20% for years. They have actually shown no signs of doing anything but enriching to run their power stations.

        According to the leaked Mossad documents, “Iran at this time [ie 2012] is not performing the activity necessary to produce weapons,”, but it is “working to close gaps in areas that appear legitimate, such as enrichment reactors, which will reduce the time required to produce weapons from the time the instruction is actually given.”

        I’m not sure that justifies the unqualified claim that in 2015 Iran isn’t doing anything more than trying to run power stations.

        BTW, you may be interested in this:

        https://www.commentarymagazine.com/2015/02/24/why-the-fake-story-about-the-mossad-contradicting-netanyahu-iran-nuclear/

        We will have bought lessened tensions for a period at no cost to our own security or anyone else’s for that matter.

        Well isn’t that exactly what the disagreement revolves around…whether or not there will be a cost to security, especially for Israel?

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  15. The relevant question is “what avenue is more likely to stifle a nuclear armed Iran, putting inspectors in place, or not?”

    Neither. A nuclear armed Iran is inevitable. IMO, the Iranians will never enter into any agreement they think would stop it or even significantly slow it. Negotiations are a pointless endeavor.

    Like

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